[For Information Purpose Only.
The Japanese language press release should be referred to as the original.]
December 9, 2019
To All Concerned Parties
Name of REIT Issuer:
Invincible Investment Corporation
Naoki Fukuda, Executive Director(Securities code:8963)
Asset Manager:
Consonant Investment Management Co., Ltd.
Naoki Fukuda, CEOContact: Jun Komo
General Manager of Planning Department(Tel. +81-3-5411-2731)

Notice concerning Revision of Forecast of Financial Results forthe 33rd Fiscal Period Ending December 2019
Invincible Investment Corporation (“INV”) today announced the revision of its forecast of financial results
for the fiscal period ending December 2019 (33rd Fiscal Period: from July 1, 2019 to December 31, 2019)as announced in “Financial Summary for the June 2019 Fiscal Period (from January 1, 2019 to June 30,2019)” dated August 22, 2019 (together with the forecast of distribution announced therein, the “Previous
Forecast”).
1.

Revision of the forecast of financial results for the fiscal period ending December 2019 (from July 1,
2019 to December 31, 2019)

Previous forecast (A)(announced on
August 22, 2019)
Revised forecast (B)Amount of Variance(B) – (A)Rate of variance((B) – (A)) / (A)Operating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

Total
Distribution
Amount
JPY million

18,043

12,107

10,701

10,70010,517

JPY million

JPY million

JPY million

JPY million

JPY million

18,753

12,941

11,685

11,685

10,517

JPY million

JPY million

JPY million

JPY million

JPY million

710

834

984

984

-

%

%

%

%

%

3.9

6.9

9.2

9.2

-

Net Income

This English language notice is a translation of the Japanese-language notice released on December 9, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers
to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language noticeis provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and
the Japanese original, the latter shall prevail in all respects.

1

Distribution
per Unit
Earnings per
Unit (Note 1,2)

Previous forecast (A)(announced on
August 22, 2019)

Excess Profit
Distribution
per Unit (Note(Excluding
Excess Profit
Distribution perUnit) (Note 1,2)

1)

Distribution
per Unit(Including Excess
Profit Distribution
per Unit) (Note 1)

JPY

JPY

JPY

JPY

1,755

1,725

-

1,725

JPY

JPY

JPY

JPY

1,916

1,725

-

1,725

Amount of Variance(B) – (A)

JPY

JPY

JPY

JPY

161

-

-

-

Rate of variance((B) – (A)) / (A)

%

%

%

%

9.2

-

-

-

Revised forecast (B)(Note 1) The total number of investment units issued and outstanding at the end of the fiscal period: 6,096,840 units(Note 2) The difference between the Earnings per Unit and Distribution per Unit (Excluding Excess Profit Distribution per Unit) is due tointernal reserve from net income. Please refer to Appendix 1 <Assumptions Underlying the Forecast of Financial Results for
the Fiscal Period ending December 2019> “Distribution per unit” for details.

(Reference)
Assumptions underlying the forecast of financial results for the fiscal period ending December 2019 areprovided in Appendix 1.
2. Reasons for the revision of forecast of financial results
As a result of sale of Winbell Kagurazaka as announced in the press release “Notice concerning
Acquisition and Sale of Domestic Trust Beneficiary Interests” dated December 9, 2019, INV expects torecord a gain on sale of JPY 1,963 million in the fiscal period ending December 2019.

INV is revising

its forecast of financial results for the fiscal period ending December 2019 in order to reflect such saleand the most recent performances.

The acquisition of Hotel MyStays Premier Narita and Art Hotel

Morioka and the sale of City House Tokyo Shinbashi will be completed in the fiscal period ending June
2020, therefore these transactions will not affect the forecast of financial results for the fiscal period
ending December 2019.
An overview of the current fiscal period is as follows.
In the fiscal period ending December 2019, the Japan hotel market continues to benefit from growth of
inbound visitors to Japan as well as world class sporting events such as the Rugby World Cup 2019 inJapan, however a series of large typhoons adversely impacted domestic leisure travel demand.

In

addition, the prolonged trade and diplomatic dispute between Japan and South Korea has caused asignificant reduction of inbound travelers from South Korea.

This appears to have had an adverse

effect on the entire hotel industry in Japan whereby hotel operators that are heavily dependent on South
Korean guests cut rates.
expectations.

As a result, the performance of the hotel portfolio has underperformed ourNOI for the entire portfolio, which is an underlying assumption of the forecast, is now

This English language notice is a translation of the Japanese-language notice released on December 9, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers
to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language noticeis provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and
the Japanese original, the latter shall prevail in all respects.

2

assumed to be JPY 15,374 million (down 7.4%) compared to the original assumption of JPY 16,609
million for the Previous Forecast as of August 22, 2019.

On the other hand, despite the tough macro

circumstances, INV benefited from its diversified portfolio and was able to grow RevPAR for the
combined domestic and overseas hotel portfolio with expected year-on-year increase of 0.5% as a total.
Taking into consideration the JPY 1,963 million gain on sale of “Winbell Kagurazaka”, the operating
revenues and net income are expected to outperform the Previous Forecast by 3.9% and 9.2%,
respectively.

INV intends to reserve JPY 1,168 million from net income (Note), and there is no change

from the Previous Forecast to the forecast of distribution per unit of JPY 1,725 for the fiscal period
ending December 2019.
(Note) Investment corporations under the J-REIT system can deduct the amount of cash distributions in calculating its taxable income aslong as they satisfy certain conditions (conduit requirements), in order to prevent double taxation between J-REIT and unitholders.
The portion that is not used for cash distribution, however, will be subject to corporate income tax and other taxes. INV has some
tax losses that were carried forward as a result of the past merger, and by utilizing such tax losses carried forward, INV can reserve
its retained earnings without paying corporate income tax and other taxes.

(Reference)
Forecasts for Performance Indicators of Hotel Properties (73 hotels (Note 1))
Y2019
June fiscal
period(Actual)Decemberfiscal period(Previous
Forecast)

Decemberfiscal period(Revised
Forecast)

Full-Year(Previous
Forecast)

Full-Year(Revised
Forecast)

Occupancy Rate (Note 2)

87.5%

89.9%

88.1%

88.7%

87.8%

ADR (JPY) (Note 3)

11,617

11,888

11,613

11,755

11,615

RevPAR (JPY) (Note 4)

10,168

10,687

10,233

10,42910,201

GOP (JPY million)(Note 5)(Note 6)

13,987

15,111

13,72929,09927,717Year-on-Year Changes
Y2019
June fiscal
period(Actual)Decemberfiscal period(Previous
Forecast)

Decemberfiscal period(Revised
Forecast)

Full-Year(Previous
Forecast)

Full-Year(Revised
Forecast)

Occupancy Rate

+0.9pt+0.8pt-1.0pt+0.8pt-0.0pt

ADR

+4.4%

-0.5%

-2.8%

+1.8%

+0.6%

RevPAR

+5.4%

+0.4%

-3.8%

+2.8%

+0.5%

GOP

+3.9%

+2.0%

-7.4%

+2.9%

-2.0%

(Note 1) Calculated based on actual results and forecasts for 73 hotel properties; of the 84 hotel properties (including Sheraton GrandeTokyo Bay Hotel, the underlying asset of preferred equity interest held by INV) owned as of today, 9 hotels with fixed-rent leaseagreements as well as Hotel MyStays Nagoya Nishiki and Hotel MyStays Sapporo Susukino which do not have comparable
This English language notice is a translation of the Japanese-language notice released on December 9, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers
to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language noticeis provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and
the Japanese original, the latter shall prevail in all respects.

3performance figures for the previous year, are excluded. For the actual performance before the acquisition of the properties
acquired in 2018 and 2019, based on the actual figures provided by the sellers. Such nine hotels with fixed-rent are Super Hotel
Shinbashi/Karasumoriguchi, Comfort Hotel Toyama, Super Hotel Tokyo-JR Tachikawa Kitaguchi, Super Hotel JR Uenoiriyaguchi, Comfort Hotel Kurosaki, Comfort Hotel Maebashi, Comfort Hotel Tsubamesanjo, Comfort Hotel Kitami, andTakamatsu Tokyu REI Hotel.
(Note 2) “Occupancy Rate” for hotel portfolio is calculated using the following formula: room occupancy rate = total number of rooms
occupied during the relevant period ÷ (aggregate number of rooms during the relevant period x number of days during relevant
period). Hereinafter the same.
(Note 3) “ADR,” or Average Daily Rate, is the value of the total room revenues for a certain period (excluding service fees) divided by the
total number of sold rooms for the same period. Hereinafter the same.
(Note 4) “RevPAR,” or Revenues Per Available Room, is calculated by dividing the total revenues for a certain period by the aggregate
number of rooms for the same period (rooms x number of days), and is the same figure as that of a product of ADR andoccupancy rate. Hereinafter the same.
(Note 5) “GOP,” or Gross Operating Profit, is rent revenue INV receives as a rent which is the amount remaining after deducting thepersonnel, material, water, electricity, and heating and advertising expenses as well as the management service fee for the hotel
operations (if any) from the hotel’s revenues. Hereinafter the same.
(Note 6) With respect to APA Hotel Yokohama-Kannai, we consider the rent paid to INV for this hotel as GOP of this hotel.

Forecasts for Performance Indicators of Residential Properties (62 properties (Note 1))
Y2019
June fiscal
period(Actual)Decemberfiscal period(Previous
Forecast)

Decemberfiscal period(Revised
Forecast)

Full-Year(Previous
Forecast)

Full-Year(Revised
Forecast)

Occupancy Rate (Note 2)

96.1%

97.1%

96.6%

96.6%

96.4%

Average Rent per Tsubo
per Month (Note 3) (JPY)

9,351

9,381

9,396

9,366

9,374

NOI (JPY million) (Note 4)

1,786

1,810

1,809

3,596

3,596

Year-on-Year Changes
Y2019
June fiscal
period(Actual)Decemberfiscal period(Previous
Forecast)

Decemberfiscal period(Revised
Forecast)

Full-Year(Previous
Forecast)

Full-Year(Revised
Forecast)

Occupancy Rate

-0.1pt+1.1pt+0.6pt+0.5pt+0.3ptAverage Rent per Tsubo
per Month

+0.5%

+0.3%

+0.5%

+0.4%

+0.5%

NOI

+1.0%

+1.1%

+1.1%

+1.0%

+1.0%

(Note 1) Calculated based on actual results and forecasts for the 62 residential properties owned as of the end of June 2019. Of the
62 properties, Winbell Kagurazaka will be sold on December 17, 2019. Therefore, for Winbell Kagurazaka, July 1, 2019
through December 16, 2019 is deemed the operating period for the fiscal period ending December 2019, and the leased area
and the leasable area expected as of December 16, 2019 is deemed as the leased area and the leasable area as of the endof December 2019 to calculate each number. Hereinafter the same.
(Note 2) “Occupancy Rate” is calculated by dividing the sum of total residential leased area by the sum of total residential leasablearea at the end of each month of each period. Hereinafter the same.
(Note 3) “Average Rent per Tsubo per Month” is calculated by dividing the total residential rental revenue including common area
charges for each month by the sum of total residential leasable area at the end of each month, indicating the average rent
per Tsubo weighted by leased area. Hereinafter the same.
This English language notice is a translation of the Japanese-language notice released on December 9, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers
to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language noticeis provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and
the Japanese original, the latter shall prevail in all respects.

4

(Note 4) Figures are rounded down to the indicated amount. Excludes one‐off insurance‐related revenues and expenses. Hereinafter
the same.

Website of INV: http://www.invincible-inv.co.jp/eng/

This English language notice is a translation of the Japanese-language notice released on December 9, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers
to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language noticeis provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and
the Japanese original, the latter shall prevail in all respects.

5

(Appendix 1)<Assumptions Underlying the Forecast of Financial Results for
the Fiscal Period ending December 2019>
Item
Fiscal period

Assumptions
The December 2019 Fiscal Period: from July 1, 2019 to December 31, 2019 (184 days)

Properties held as of the end of the December 2019 Fiscal Period: 146 properties andpreferred equity interests in one TMK

Assets undermanagement

Of the properties held as of today (147 properties and preferred equity interests in one
TMK), INV assumes that INV will dispose of one residential property as of December 17,
2019 (Note) and that there will be no other change in the portfolio through the end of the
fiscal period ending December 2019
(Note) For details regarding the disposition, please refer to “Notice concerning Acquisition and Saleof Domestic Trust Beneficiary Interests” dated today.

As of the end of the December 2019 Fiscal Period: 6,096,840 units
Units outstanding

INV assumes that there will be no change to the current 6,096,840 units issued andoutstanding through the end of the December 2019 Fiscal Period.

Balance as of the end of the fiscal period ending December 2019: JPY 259,174 million(borrowing: JPY 252,174 million, investment corporation bonds: JPY 7,000 million)
Interest-bearing liabilities
INV assumes no other new loan or prepayment of loan through the end of the December
2019 Fiscal Period.

This English language notice is a translation of the Japanese-language notice released on December 9, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers
to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language noticeis provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and
the Japanese original, the latter shall prevail in all respects.

6

Item

Assumptions
INV expects to record rental revenues for each fiscal period as follows:・Rental revenues(of these, hotel rents)(fixed hotel rents)(variable hotel rents)
・Management contract revenue
・TMK dividend amountOperating revenues

December 2019
Fiscal Period
JPY 14,681 million(JPY 11,956 million)(JPY 6,466 million)(JPY 5,489 million)
JPY 1,447 million
JPY 661 million

・Gain on sale

JPY 1,963 million

Total operating revenues

JPY 18,753 million

INV estimates gain on sale of JPY 1,963 million from sale of Winbell Kagurazaka to becompleted on December 17, 2019 for the fiscal period ending December 2019.
INV estimates the amount of dividends on the preferred equity interests based on theperformance of the underlying asset and the assumed amount of expenses incurred by
the special purpose company.
INV recognizes management contract revenue from the overseas hotels. The forecasts
of management contract revenue are based on estimated performance of the underlying
assets and the assumed amount of expenses incurred by the hotel management
Management contract revenue have been calculated based on thecompany.
exchange rate of USD 1 = JPY 110.00, as the exchange rate is fixed based on thecurrency put/call options covering approximately 85% of expected cash flow.
Rental revenues are calculated based on estimates as of today. In addition, INV assumes
there will be no delinquencies or non-payment of rent by tenants.

This English language notice is a translation of the Japanese-language notice released on December 9, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers
to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language noticeis provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and
the Japanese original, the latter shall prevail in all respects.

7

Item

Assumptions
INV expects to incur property related expenses and management contract expenses outof operating expenses for each fiscal period as follows:

Operating expenses

・Facility management fees(of these, repair costs)
・Taxes and other public charges(Note)
・Insurance expenses
・Depreciation expenses
・Other expenses
Total property related expenses
and management contract
expenses

December 2019
Fiscal Period
JPY 516 million(JPY 22 million)
JPY 621 million
JPY 145 million
JPY 3,804 million
JPY 131 million
JPY 5,219 million(Note) Property taxes and city planning taxes on the assets acquired in 2019 are
calculated on a pro-rata basis with the previous owners and settled at the time ofacquisition, and are not recorded for the fiscal period ending December 2019 andrecorded from the fiscal period ending June 2020 as the amount equivalent to such
settlement is included in the acquisition cost.
INV expects to incur other operating expenses than the property related expenses ormanagement contract expenses for the fiscal period ending December 2019 as follows:
December 2019
Fiscal Period
JPY 592 million

・Other operating expenses(of these, asset management
fees)(JPY 300 million)

INV expects to record net operating income for each fiscal period as follows:
December 2019 Fiscal
PeriodJPY 15,374 million

・NOI
NOI

(of these, domestic hotel NOI)(of these, overseas hotel NOI)(of these, residential NOI)(JPY 12,060 million)(JPY 1,317 million)(JPY 1,811 million)

NOI calculation method in the above table is as follows
・NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses+
Dividends on the preferred equity interest (TMK dividend) + (Management Contract
Revenue‐Management Contract Expense)

This English language notice is a translation of the Japanese-language notice released on December 9, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers
to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language noticeis provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and
the Japanese original, the latter shall prevail in all respects.

8

Item

Assumptions
INV expects to incur non-operating expenses for each fiscal period as follows:

Non-operating expenses

・Interest expense
・Finance related costs・Interest for investment corporation
bonds
・Depreciation of investment
corporation bonds issuance
expenses・Other non-operating expenses(expenses relating to the issuance of
new units)
Total non-operating expenses

December 2019
Fiscal Period
JPY 692 million
JPY 399 million
JPY 15 million
JPY 4 million

JPY 144 million
JPY 1,256 million

The distribution per unit is calculated in accordance with the cash distribution policy as
set forth in INV’s Articles of Incorporation.
With respect to the distribution for the fiscal period ending December 2019, INV expects
to distribute an aggregate amount of JPY 10,517 million (distribution per unit: JPY 1,725)
which is the remaining amount after retaining JPY 1,168 million for internal reserve fromnet income for the fiscal period ending December 2019 (JPY 11,685 million).
Distribution per unit

For the fiscal period ending December 2019, INV expects to record deferred gain on
hedge of the interest rate swap and the currency option as the valuation and conversion
adjustments, etc. of JPY 87 million, which is equal to the amount for the fiscal period
ended June 2019. The distribution per unit is calculated based on the assumption thatfluctuation of the market value of the interest rate swap and the currency option does notaffect the distribution per unit.
Distribution per unit may vary due to various factors, including changes of the assets
under management, fluctuation of rent income associated with reasons such as changeof tenants and occurrences of unexpected repairs.

This English language notice is a translation of the Japanese-language notice released on December 9, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers
to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language noticeis provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and
the Japanese original, the latter shall prevail in all respects.

9

Item

Excess profit distribution
per unit

Assumptions
INV believes maintaining the stability of cash distributions over the medium term is oneof the most important factors in determining the amount of distribution for a given fiscal
period, and therefore, INV has adopted the policy to make distributions in excess of
profits in order to stabilize distributions, in cases where dilution of investment units orsignificant expenses are to be recorded in connection with, among other things, theacquisition of assets or the raising of capital, leading to a temporary decrease in
distribution per unit, taking into consideration the level of distribution per unit assuming
such acquisition of assets or capital raising had contributed for a full fiscal period.
INV may also consider making distributions in excess of profits for the purpose of
decreasing the impact from corporate tax increase arising from different rules in tax andaccounting practices, such as treatment on depreciation of fixed term land lease or asset
retirement obligation.
With respect to the fiscal period ending December 2019, INV will not make distributions
in excess of profits as the impact to distribution per unit due to one off expenses inconnection with the public offering and the borrowings is limited with the increase inrevenue from the acquisitions of new properties. In addition, INV will not make
distributions in excess of profits in order to cope with the discrepancy between tax andaccounting treatment.

Excess profit distribution per unit

Other

December 2019
Fiscal Period-

INV assumes there will be no amendments to applicable laws and regulations, thetaxation system, accounting standards and other regulations that would affect theforegoing forecasts.
In addition, INV assumes there will be no unforeseen material changes in general
economic trends, real estate market conditions and other trends and conditions.

This English language notice is a translation of the Japanese-language notice released on December 9, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers
to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language noticeis provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and
the Japanese original, the latter shall prevail in all respects.

10